Van Hollen Urges Increase in CDFI Fund to Support Local Communities in COVID-19 Response

Statement

Today, U.S. Senator Chris Van Hollen (D-Md.) urged Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer to increase funding for the Community Development Financial Institutions (CDFI) Fund within the phase three coronavirus package. The CDFI Fund provides financial and technical assistance grants to local financial institutions that are mission-focused and often provide financing to small businesses, non- profits, affordable housing, and community development projects in underserved communities. Maryland is home to 17 CDFIs, and the state received over $2.6 million in funding in Fiscal Year 2019 alone. For every dollar awarded, CDFIs leverage an average of $10 dollars of private investment.

Senator Van Hollen writes, "I request a funding allocation of at least $550 million for the CDFI Fund in the upcoming COVID-19 stimulus package. CDFIs have the organizational tools and resources needed to immediately provide debt relief, working capital, and consumer loans to their borrowers."

"CDFIs finance small businesses, affordable housing, non-profits, and community development projects which address the needs of low-income Americans and their communities," he continued. "Many CDFI borrowers are experiencing a multitude of challenges due to the coronavirus crisis. For example, CDFIs are reporting that small-business and non-profit borrowers are struggling to repay debt as businesses are ordered to be shut down, and affordable housing developers are experiencing delays and stops in construction."

As a result of lockdowns in place alongside strict guidance from the Centers for Disease Control and Prevention to limit social contact, small businesses across America have suffered plummeting revenues. Some have been forced to lay off staff or close indefinitely. Senator Van Hollen heard directly from leaders in Maryland's small business community this week and has acted quickly to urge McConnell and Schumer to address these concerns within the next COVID-19 response package. Van Hollen's proposal to increase the CDFI fund by at least $550 million would also waive certain program requirements -- making it easier for small businesses to receive funds as soon as possible -- and eliminate interest rates on the existing Financial Assistance Direct Loan program.

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